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Warehouse and logistic space
In March this year Hines kicked off the strategy by buying a logistics complex in Maintal, outside of Frankfurt am Main. The plan is to make capital investment of up to €400m in small to mid-sized logistics properties over the next two years.
Despite a relatively quiet start to the year, particularly in Q1 which saw a fall of nearly 40% year-on-year, the German logistics sector remains the third strongest commercial asset type, with a market share of 10%. This last month has seen a number of significant deals.
The Houston, Texas-headquartered Hines Group is pushing strongly ahead with its strategy to develop logistics across Germany. The company plans to invest €400m in German logistics properties over the next two years, and has just bought two plots of land with a total area of 115,400sqm in Hamm in the state of North Rhine-Westphalia, in an off-market deal and for an undisclosed amount. Hamburg Commercial Bank is providing the financing, while Hines was advised by DeGold on development aspects and GSK as lawyers.
The company said it would build a logistics complex comprising two halls on the 115,400 sqm site, with around 68,900 sqm of total lettable space, and units starting at 9,000 sqm. Construction is scheduled to start before the end of 2019, and the project will be DGNB-certified. Hines said its strategy is to pursue a develop-to-hold approach, with the aim of selling at a future date.
Alexander Möll, senior managing director at Hines, said: “We want to continue developing logistics properties through innovations. To achieve that goal, we are currently exploring alternative timber-based modular construction methods as well as customized furnishings and facilities. For example, we plan to further upgrade the properties by providing sleeping quarters for drivers or fitness/sports facilities for all employees.”
In March this year Hines kicked off the strategy by buying a logistics complex in Maintal, outside of Frankfurt am Main. The plan is to make capital investment of up to €400m in small to mid-sized logistics properties over the next two years.
Since its first investment in Germany in 1991, the privately-owned Hines has acquired or developed a total of 40 properties with an overall surface area of over 1.6 million sqm for itself or on behalf of external clients, including properties such as the Main Tower, 160 Park View and the Silberturm in Frankfurt, Zoom and Wohnpark Südkreuz in Berlin, Hofstatt, Uptown München and OSKAR in Munich, the Überseequartier Nord district in Hamburg, the Benrather Karree and Kö-Quartier in Düsseldorf, and the Postquartier and Kronprinzbau 1+2 in Stuttgart. Hines currently manages property in Germany with an overall value of around €4.1 billion as an asset and development manager.
Meanwhile, London-listed Tritax Eurobox made its ninth investment since its IPO last year, buying a prime logistics facility in Hammersbach near Frankfurt am Main for €50.6m in an off-market transaction. The initial net yield is put at 4.75%. The seller is the developer Dietz, Tritax’s asset manager, with Dietz retaining a small minority interest in the asset, which is let to ID Logistics.
The lease has a ten-year term with special termination rights after five or six years. After the first 36 months the lease will become subject to annual indexing in line with the German consumer price index.
German-listed VIB Vermögen is also looking to expand its geographical footprint into northern Germany, by entering into a joint venture with Dutch logistics developer WDP, whose activities to date have been in the Benelux countries.
The two companies have signed a letter of intent to examine joint logistics projects in North Rhine-Westphalia, Bremen and Hamburg under the umbrella of a new joint company. After completion, the properties would be kept in the portfolio. VIB Vermögen’s CEO Martin Pfandzelter says that this collaboration will enable both companies to pool their development expertise and complement their respective customer bases. VIB, founded more than 25 years ago, is largely focused on southern Germany.
Paris-based asset manager AEW will also be intensifying its efforts in the sector after being awarded a €275m logistics separate account mandate. The unnamed insurance group wants to invest the money in key logistics hubs and conurbation across German.
AEW’s head of funds Marc Langenbach said that AEW had already identified a pipeline of initial investments for the mandate.
In a recent research note from Colliers International Deutschland, head of industrial and logistics investment Hubert Reck said, “The industrial and logistics asset class has become an important pillar of the German investment market as reflected by consistent double-digit market shares over the past several years. Potential demand on the current seller’s market is being offset by limited supply of both stock and new-build assets, which is putting the brakes on transaction volume.”
As to who’s doing the buying, in Q1 of this year German investors outperformed foreign investors, generating just under 54%, or €603m, of the overall €1.1bn of investment in the sector.. Investors from the UK (around €203m), the US (around €178m) and France (around €112m) were particularly active in the first two months of the year, while Asian investors remained quiet.
Colliers’ Reck said, “There is no end in sight for yield compression in 2019. Based on current purchase price negotiations, we expect prime gross yields for latest-generation logistics assets with standard lease terms of 10 years and strong-covenant tenants to continue to drop over the course of the year.”